Strategic workforce planning is a relatively new concept and practice for most organizations. Many firms have a simplified form of workforce planning in place which is focused on replacement of people in current positions and functions. It is a rare experience to find an organization that has thought through its future needs and balanced those needs with a mix of both hiring — internal and external — along with development.
Why the Need
Growth and recession are hard to predict. Neither are typically gradual or linear. There may be a sudden need to add dozens or hundreds of employees in new business areas or in different parts of the world. Or, there may be a sudden shift in products that makes many employees redundant. Economies can suddenly slow and business can evaporate quickly. Replacement planning does not deal well with any of these scenarios. And this is why typical workforce planning is looked on with scorn by many human resource professionals as well as business managers.
Traditional workforce planning (and often recruiters, as well) has made a number of assumptions that are no longer valid and can be grossly misleading. The first and largest assumption is that there are enough skilled workers available to meet current and future needs. The second is that these skilled workers will accept the employment conditions and salaries offered. The third assumption is that universities or other educational institutions will produce the right talent to meet these emerging needs.
While there are plenty of people, only a small fraction of them have the skills and motivation to meet or adapt to emerging needs. And, many who have skills are choosing to start their own businesses or work in small firms where they can have significant influence over working for traditional organizations. This is especially true of Generation Y (those under 25).
American educational institutions have suffered massive budget cuts and loss of staff, and except for a handful of elite universities, are ill-equipped to educate the numbers of people that will be needed — even if they could identify the necessary skills and put in place academic programs and staff in a timely way.
Recruiting the right skilled people has already become a challenge, internal development functions have been eliminated or reduced, and the information most firms have about their current employees’ skills and abilities is lacking. Very few organizations have a comprehensive, current, and searchable database of employees and their skills, abilities, interests, and education. Organizations that rely on the assumptions outlined above or believe that the changes taking place today are nor revolutionary will be unlikely to prosper financially.
The current convergence of political, economic, and social trends, including the decline of large-scale manufacturing, the automation of many activities done by people, the growing importance of the developing world as consumers and inventors, genetic engineering, the rise of educated and childless women, and the gradual shift of economic power and consumption to Asia, and particularly China, means that we will need to re-skill and re-staff every existing organization. New firms will also spring up creating positions and functions that do not exist.
Therefore, the need for a strategic and forward looking talent plan is becoming essential to business success.
Many firms are realizing that it is not enough to just calculate turnover and projected growth and then go recruit people. The whole process of acquiring, developing, and retaining talent requires more sophisticated thinking and tools than have previously been characteristic of the human resources function.
An effective workforce planning process should focus on the following four areas:
- Gaining market awareness in order to better understand emerging trends and to do competitive analysis around skilled talent.
- Integration of talent planning with business planning so that business needs can be translated into needed skills and abilities and so that an understanding of available skills can be included in the business plan.
- Development of a system-level focus on identifying key positions and integrating employee development, internal mobility, succession planning, and recruiting.
- The use of scenario planning and dynamic modeling to help focus activity and justify investments in a variety of approaches
Step 1: Market Awareness
Workforce planners need to be aware of business, economic, political, demographic and social changes, and trends. They also need to keep up-to-date on emerging skills needs within their organizations as well as the industry.
For example, the Future of Talent Institute that I founded tries to provide this information to clients. It focuses on identifying emerging trends, sorting the significant ones from the insignificant, and in making sense of the information as it pertains to developing a talent strategy.
Data such as this can be very useful. For example, several years ago Cisco Systems identified the need very early for HTML web programmers. They realized that there were few who had those skills, so they started hiring college grads with backgrounds in music and math and trained them in HTML programming. This gave them a decisive advantage over the competition, leaving the competition scrambling to catch up.
Keeping tabs on who has critical skills and where they are located will be a differentiator in how successful your sourcing will be. It will also provide the inputs you need to calculate whether a development program would be more cost-effective than a recruiting approach or what combination would be most economical and effective for your organization.
Talent supply data is the most difficult information to get today, partly because we have not clearly defined needed skills. It is almost impossible to know how many people with a particular skill are in the market. Social networks, data mining, growing corporate databases, and other tools may improve this situation, but focused effort is going to be required for many years to get the level of knowledge we will need.
Step 2: Integrating Talent Planning With Business Planning
Business planning is becoming talent planning. Any business decision that is made today has to factor in the availability of skilled talent to execute the plan. As we stated above, it is an unsafe assumption to believe that the people you need are available and are willing to be employed. Business planning and analytical tools should be applied to the people side of business to identify skills, find people who have the needed skills, conduct experiments to determine the minimum set of skills needed to accomplish a job — rather to go for the maximum set of skills as is common today.
Step 3: Systems Integration Approach
In a market where certain skills may not exist at all or where they are very scarce, recruiting cannot be relied on as a sole supplier. In many cases, it may be possible to find the skills needed internally or it may make more sense economically to develop internal or external people to meet those needs.
By making workforce planning the highest-level activity and integrating employee development, internal mobility, recruiting, retention activities, and succession planning with it, organizations can begin to acquire above-average talent.
Removing talent supply from being the sole responsibility of recruiting to broader set of functions allows more comprehensive thinking about people.
Whenever the need for talent is identified today, most organizations go immediately into hiring mode. A hiring manager opens a requisition for a new person. There may be a cursory look for an internal candidate, but it is unlikely that one would be found. After several weeks and numerous interviews, someone is hired. Then there is a wait for them to actually start, a learning period before they are productive, and a high probability that they were not a good hire and will leave or be terminated.
Imagine instead that rather than immediately opening a requisition, a hiring manager, along with a talent manager, go through a process of looking at internal talent, modeling the costs and time involved in training someone for the position, predicting the available supply, time to recruit, and the time it takes to train them. They would then decide on an employment model: regular employee, part-time, contractor, and so on, to see which offers the highest benefit and the lowest risk and cost.
This requires an integrated function with data about internal and external data about talent and a desire to find the fastest, highest-quality employment model to achieve the business goal.
Step 4: Scenario Planning and Dynamic Modeling
Although scenario planning is no longer new, having been around since the 1960s, HR has just recently adopted it to look at various potential talent-demand situations.
Scenario planning, sometimes simplistically referred to as what-if planning, looks at a variety of economic and business trends, as well as other factors that have been identified as possibly impacting the supply of talent. Using different sets of factors, scenario planners develop recommended responses to meet the supply challenge.
By including in this process some of the mathematical modeling tools that are available, a talent manager could project, for example, the benefits of training over hiring or of the value of one source of candidates over another based on turnover and time to productivity.
Talent planning will become a critical function within the human resources area and will greatly enhance the ability of the organization to have the talent it needs available when and where it is needed. Recruiting is a vital part of that success, but it cannot stand isolated and alone as it does now.